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Real estate investment trust (REIT)
A closed-end investment company that accumulates money by selling shares to investors, in order to
invest it in various forms of real estate including mortgages; these invest only in specific types of real
estate or rea

Loan collateral
An item high enough to cover the principal portion of the loan.
Lien
A legal claim permitting the lender, in case the borrowed defaults, to liquidate the items serving as
collateral to satisfy the obligation.
Chattel mortgage
A mortgage on

Convertible bonds
A special type of fixed-income obligation that carries a conversion feature permitting the investor to
convert it into a specified number of shares of common stock.
Provides income and possible price appreciation (capital gains)
Mutual

Dividend reinvestment plan (DRP)
A program whereby stockholders can choose to take their cash dividends in the form of more shares of
the company's stock.
Bonds
They are liabilitiesthey're publicly traded IOUs where the bondholders are actually lending mo

Load funds (front-end loads)
A fund that charges a fee at time of purchase. There is normally no charge or commission to pay when
you sell your shares.
Low-load funds
A fund that has a low purchase fee.
Back-end load (redemption fee)
A commission charged

Price/earnings (P/E) ratio
A measure of investors' confidence in a given security; calculated by dividing market price per share by
earnings per share. The higher the price/earning multiple, the more confidence investors are presumed
to have in a given se

Risk-return trade-off
If you want greater return, you will most likely have to accept greater risk. (Amount of risk is directly
related to expected return.)
Future returns
We must formulate expectations of its future current income and future capital appr

Tax-exempt money funds
A money fund that limits its investments to tax-exempt municipal securities with very short (30-to 90day) maturities. These appeal to investors in high tax brackets.
Government securities money funds
These money funds eliminate any

Securities Investor Protection Corporation (SIPC)
A nonprofit corporation, created by Congress and subject to SEC and congressional oversight that
insures customer accounts against the financial failure of a brokerage firm. (Not an agency of the U.S.
gove

Serial obligation
An issue that is broken down into a series of smaller bonds, each with its own maturity date and
coupon rate.
Revenue bond
A municipal bond serviced from the income generated by a specific project.
General obligation bond
A municipal bon

Consumer loans
Loans made for specific purposes using formally negotiated contracts that specify the borrowing terms
and repayment.
They are one-time transactions made for specific purposes (big-ticket items).
Once it is paid off, there is no more credi